All Forum Posts by: Jeff Rabinowitz

@Robert Turner, excellent. You are now (or soon will be) a real estate investor. (I don't consider anyone who hasn't cashed a check an investor.) After you close this one I would be pleased to hear more of the details.

@Will Barnard, that would be a great feature. A couple of the serial connectors on my list are local investors with whom I would like to keep in contact. Unfortunately, their constant colleague notices are annoying.

@Jean Bolger, I would like to see what "My Connections" are posting and talking about but that tab is cluttered up with notices of who 4 to 6 people are now colleagues with or who they are now following. I have absolutely no interest in who someone who adds half a dozen colleagues a day is now colleagues with. I am interested in what those I have connected to are discussing. Is there a fix?

I have made an effort to become a bit more active here on BP. When I check my dashboard it is almost entirely Mr. X and Ms. Y are now colleagues. It seems I have accepted requests from 3 or 4 people who want to be colleagues with everyone on the site. (I deleted a couple people from my colleague list but the problem persists.) Is there a way to filter out the colleague notifications so that I might be able to find what people are asking and talking about more easily?

The term you are seeking is debt service ratio. This is sometimes referred to as the debt service coverage ratio. It is calculated by dividing the Annual Net Operating Income by the Annual Debt Service (principal and interest).  If the ratio is greater than 1 the property is generating enough income to make the loan payments and provide a profit. If it is less than 1 the property does not generate enough income to make the loan payments.

The simplest structure would be to take a loan from your father in law. The loan will be safer for the lender if it is secured. Whether the loan is secured or not, the interest rate, and any other terms of the loan are up to the borrower and lender.

LLCs do not provide tax advantages. The income that the LLC earns passes through to the owner. Most people who use them for their rentals use them because they can provide Liability protection if used correctly. However, many investors who use them for this purpose are not very careful with them. LLCs can be easily pierced in a lawsuit if used improperly. Adequate insurance can provide much of the protection of an LLC. It is best to consult professionals: your lawyer, accountant, and insurance agent to see how LLCs might affect your specific situation.

I set up a Solo 401K with their help. They responded to questions quickly. I would recommend them.

If you think you will be applying for bank financing under your business name at some point it may be wise to choose a name that does not indicate yours is a real estate business. Banks sometimes choose to limit their exposure to certain businesses and real estate has been out of favor recently. A loan application from a real estate company may be rejected before it is carefully reviewed during a time when RE is out of favor while a loan application from a company with a name that does not clearly identify it as dealing in real estate may get further into the review process. The further into the process you get the greater the possibility that your request will be approved.

You don't state how much you wish to borrow or an details of your flip. You do state it will cost ~$10K to borrow the funds from the hard money lender. That may seem expensive but if you have a great deal and clear $50K on it you may be glad you did it. What if you clear $80K? You have to decide what a reasonable return is but if you need the funds to do the deal you will have to pay for them. Will you be better off if you do the deal or not?

It will be more expensive and more difficult to borrow because of your inexperience. The lender will likely have more to lose on the deal than you. They will analyze the deal before making any loan. If your plan is not sound or there is not enough equity in the deal they will not lend. Frankly, it sounds like you may be better off having a relationship with an experienced investor and your lender may be that person.